Automobile 2006

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Transcript of Automobile 2006

Page 1: Automobile 2006

AutomotiveSeptember 2006

www.imacs.in

Page 2: Automobile 2006

AUTOMOTIVEwww.imacs.in

• Market Overview

• Government regulations & policy

• India Advantage

and business opportunities

Contents

Page 3: Automobile 2006

AUTOMOTIVEwww.imacs.in

Market Overview• Market Overview

• Government regulations & policy

• India Advantage and business opportunities

Page 4: Automobile 2006

AUTOMOTIVEwww.imacs.in

Profile: Indian Automotive Industry

Vehicle sales in India in 2005 - 06 ( in mil)

1.14

0.35

7.05

0.36

0 2 4 6 8

Cars CVs Two wheelers Three Wheelers

• The industry has grown at a CAGR of 14% p.a over the last 5 years, with sales of 9 million vehicles in 2005-06

• With the potential to emerge as one of the largest in the world. Presently, India is • 2nd largest two wheeler market in the world• 4th largest commercial vehicle market in the world• 11th largest passenger car in the world and is expected to be the 7th largest market by

2016

• The industry has emerged as a key contributor to the Indian economy

Source : SIAM

Size of around US$ 34 billion

in 2006

Market Overview

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Auto components industry has also grown at a rapid pace ...

Size of Component Industry (US$ mn)

3849 39654470

5430

6730

8700

10000

FY00 FY01 FY02 FY03 FY04 FY05 FY 06

17%

• The Indian auto components industry has grown at 17% CAGR over the last few years to reach a size of around US$ 10 billion in 2005-06

• Market breakup: OEM demand ~ 54%, replacement market ~30%, exports ~16%

Source : ACMA

FY refers to Financial Year – April to March

Market Overview

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Players: Indian auto industry

Global OEM

Indian OEM

Indian Suppliers

Global Suppliers

Engineering &

Development Companies

Indian Auto

Industry

• GM • Toyota • Ford • Hyundai• Maruti Suzuki • Honda• Skoda• Volvo• Mercedes

• Tata Motors• Mahindra & Mahindra• Bajaj Auto• TVS Motors• Hero Honda• Bajaj Tempo• Ashok Leyland

• Bharat Forge• Sundram Fasteners• Rane Group• Shriram Pistons• RICO Auto• Sono Koyo Steering

• Delphi• Visteon• Bosch• Denso• Valeo• Thyssen Krupp

The Indian auto industry is highly competitive with a number of global and Indian auto companies present

Market Overview

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Delhi-Gurgaon-Noida-Ghaziabad

Kolkata

Mumbai-Pune-NasikAurangabad

Jamshedpur

Chennai Bangalore Hosur

Rajkot-Halol

Hyderabad

Ludhiana

Haridwar

Pitampur

Automotive clusters in India

Ashok Leyland EnfieldFord

Greaves Hindustan Motors HyundaiMahindra & Mahindra Tatra Toyota Kirloskar TVS MotorsVolvo

Ashok Leyland EicherForce Motors Hero HondaHindustan Motors HondaHonda SIEL ICMLKinetic LMLMajestic Maruti

SuzukiPiaggio YamahaSwaraj Mazda Tata Motors

North / Central

Ashok Leyland Atul AutoBajaj Auto Daimler

ChryslerFIAT Force

Motors GM Greaves KineticM & M PremierSkoda Tata

Motors

WestHindustan MotorsTata Motors

East

South

Source: SIAM, IMaCS analysis

Major automotive clusters - Mumbai-Pune-Nasik-Aurangabad (West), Chennai -Bangalore-Hosur (South) and Delhi-Gurgaon-Faridabad (North)

Market Overview

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Exports are rising - India has the potential to become the global outsourcing hub

Vehicle Exports from India

0

100000

200000

300000

400000

500000

600000

CV Cars 2 Wheelers 3 Wheelers

Units

0

10

20

30

40

50

60

%

Exports (2005-06) Growth rate ( 4 year CAGR)

Indian vehicle exports have grown at a scorching rate of over 40 % over the last few years, while component exports have grown at around 25 % per annum. Key exporters include:

• Maruti, Tata Motors, M & M and Hyundai for Passenger Cars and MUVs• Tata Motors and Ashok Leyland for LCV / M & HCVs

• Bajaj, TVS Motors and Hero Honda for 2 wheelers

Export of auto components

(USD million )

456 625 578 760

1,800

10201400

FY00 FY01 FY02 FY03 FY04 FY05 FY06

25%

Market Overview

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Growth drivers for theIndian automotive industry

Contemporary products

Shorter life cycle

Growth in Income levels

Easier financing

Government Policies

New productlaunches

Indian Automotive Industry

Increasing consumer

demand

Cost Competitiveness

Overall economic growth

Lower duties & taxes

Export Competitiveness

Reduced cost to consumer

India emerging as a manufacturing hub

Market Overview

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Growth potential of theIndian automotive industry Potential Vehicle sales in India in 2015 - 06 ( in mn)

2.65

0.64

27.8

0.87

0 10 20 30

2015-16

Cars CVs Two wheelers Three Wheelers

• The size of the Indian automotive industry is expected to grow at 13% p.a over the next decade to reach around USD 120 - 159 bn by 2016.

• The total investments required to support the growth is estimated at around USD 35 - 40 bn

0 5 10 15 20 25

ComponentsExports

DomesticComponents

$ Billion

USD 20 - 25 bn

USD 13 - 15 bn

• The Indian auto component industry is well positioned to capitalise on the growth in outsourcing to low cost countries

• Exports would lead the growth in the component industry, which is expected to be around USD 33- 40 bn by 2015

Projected size of Auto Components industry - 2015

Source: AMP Vision, ACMA Vision

Market Overview

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AUTOMOTIVEwww.imacs.in

Government regulations and policy• Market Overview

• Government regulations & policy

• India Advantage and business opportunities

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Policies relating to the sector: Auto Policy • In 2002, the Indian government formulated an auto policy that aimed at promoting

integrated, phased, enduring and self-sustained growth of the Indian automotive industry

• allows automatic approval for foreign equity investment upto 100% in the automotive sector and does not lay down any minimum investment criteria.

• lays emphasis on R & D activities carried out by companies in India

• Weighted tax deduction of upto 150% for in-house research and R & D activities

• Formulation of an appropriate auto fuel policy to ensure availability of adequate amount of appropriate fuel to meet emission norms

• confirms the government’s intention on harmonising the regulatory standards with the rest of the world

Government regulations & policy

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Automotive regulations in IndiaIndian automotive regulations are closely aligned to the ECE regulations. The table below shows the level of alignment of the Indian regulations with the ECE regulations

Status of Indian Regulation

Number of regulations

Fully / Partially aligned 43

In process of being aligned 32

Items / Regulations to be covered 39

Total 114

Source: IMaCS Analysis

The key regulations that are likely to impact the auto industry in the future are:

• Crash Related Regulations• Introduction of Bharat Stage IV norms

Government regulations & policy

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Trends in future regulations – Safety and Emission related

2009

2008

2006

2004200

7200

52010

• Crash requirements aligned with EU

• Mandatory Airbags

• Bharat Stage IV in Metros and Bharat Stage III in rest of the country

• India is expected to align its crash requirements and emission standards with European standards in the 2008 / 09 timeframe

• Presently Bharat Stage III ( Equivalent to Euro III) is mandated in Metros and other large cities and Bharat Stage II ( Equivalent to Euro II) for the rest of the country

• Bharat Stage IV ( equivalent to Euro IV) is expected to be introduced in the large Indian metros around 2009 and Bharat Stage III in the rest of the country

Approach

• Harmonization with ECE standards

• Homologation and Certification testing agencies and centres

Regulation Road Map Targets• Industry challenges to development• Better vehicles: safer and more

environment friendly

Government regulations & policy

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State-of-the-art test facilities will support the growth of the auto industry• The Government of India is promoting

National Automotive Testing and R&D Infrastructure Project (NATRIP) to support the growth of the auto industry in India

• NATRIP envisages setting up of five independent and up gradation of existing test centres

• Testing centres at Manesar (Haryana), Chennai (Tamil Nadu), Pune (Maharashtra)

• Proving ground at Indore (MP)

• Tractor testing facility at Rae Bareilly (UP)

• Hill Driving Training Centre at Silchar

(Assam)

New testing & homologation

center at MANESAR

Up-gradation of VRDE at

AHMEDNAGAR

Up-gradation of ARAI at

PUNE

New testing center for tractors & off-

road vehicles, accident data analysis and

specialised driving training at RAE

BAREILLY

New test & homologation center near CHENNAI

New complete proving ground

at INDORE

Hill Area driving training

center and Regional In-Use

vehicle management

center at SILCHAR

Government regulations & policy

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India Advantage and business opportunities• Market Overview

• Government regulations & policy

• India Advantage and business opportunities

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AUTOMOTIVEwww.imacs.in

Attractiveness of the Indian automotive industry

Large and growing domestic demand• Demand growth expected to be around

10 % CAGR making India one of the fastest growing markets

Proven product Development capabilities

• Capabilities to develop complete vehicles and systems

• More than 125 Fortune 500 (including large auto companies) have R&D centres in India

• Companies can leverage India’s acknowledged leadership in the IT industry

Stable economic policies• Continuity in reforms and

policies• India targets to emerge as the

“manufacturing hub” for small cars

Competitive manufacturing cost •Implementation of VAT, has positioned India as one of the leading low cost manufacturing sources

High quality standards• 12 Indian component

manufacturers have won the Deming Prize for quality

• Most leading component manufacturers are QS and ISO certified

Export Potential • Increased outsourcing has led

to a large potential to export components and vehicles to other markets

Indian Auto

Industry

India Advantage and business opportunities

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Opportunities in the Indian automotive sector

• Participate in domestic

growth opportunities• Exports of vehicles• Exports of components• Engineering and Design

Services

Indian

Automotive

Sector

Domestic Opportunities Global outsourcing Opportunities

• Potential investors can capitalise on opportunities both in the domestic and export oriented segments

• Investment potential of upto USD 35 - 40 bn in this sector over the next 10 years

• Investments in the Indian automotive industry can be in various forms• 100 % subsidiary - 100 % FDI through automatic route allowed in this sector • JVs with local firms• Technology support or sharing agreements

India Advantage and business opportunities

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Key players in the Indian auto industry - Passenger Cars and CVs

The largest player in the Indian industry. Plans to launch new and excitingproducts in the Indian markets, including the ‘100,000’ car

Suzuki’s JV in India and the largest passenger car manufacturer in India

The third largest passenger car manufacturer in India and one of the largest exporters of vehicles. Has established India as one of its manufacturingbases in the world. Is planning to invest heavily to boost exports from India

Has vision of capturing 10 % share of the Indian passenger car market by 2010

One of the leading players in the Indian premium cars segment

One of the leading players in the Indian premium cars segment

India Advantage and business opportunities

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Key players in the Indian auto industry - Passenger Cars and CVs

One of the leading players in the Indian premium cars segment. Plans to enter the small car segment by re-launching the Matiz

One of the largest players in the UV / MUV segment

The 2nd largest CV manufacturer in India

Other global players who are in India / have plans for India include -Volvo, Daimler Chrysler, BMW and Nissan Motors

India Advantage and business opportunities

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Key players in the Indian auto industry - Two wheelers

The largest 2 wheeler manufacturer in the world

The 2nd largest 2- wheeler manufacturer in India and the largest 3 wheeler manufacturer. Has plans for establishing a manufacturingfacility in Indonesia

The third largest 2 wheeler manufacturer in India. Has plans for establishing a manufacturing facility in Indonesia

Has recently entered the Indian market through its direct subsidiary( in addition to its JV – Hero Honda)

Has recently entered the Indian market through its direct subsidiary

India Advantage and business opportunities

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The India Brand Equity Foundation is a public-private

partnership between the Ministry of Commerce & Industry,

Government of India and the Confederation of Indian

Industry. The Foundation’s primary objective is to build

positive economic perceptions of India globally

India Brand Equity Foundation

c/o Confederation of Indian Industry

249-F Sector 18, Udyog Vihar Phase IV

Gurgaon 122015, Haryana, INDIA

Tel +91 124 401 4087, 4060 - 67

Fax +91 124 401 3873

Email [email protected]

Web www.ibef.org

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DisclaimerThis publication has been prepared by ICRA Management Consulting Services (IMaCS) for the India Brand Equity Foundation (“IBEF”).

All rights reserved. All copyright in this publication and related works are jointly owned by IBEF and IMaCS.

The same may not be reproduced, wholly or in part in any material form (including photocopying or storing it in any medium by electronic means and whether or not transiently or incidentally to some other use of this publication), modified or in any manner communicated to any third party except with the written approval of IBEF.

This publication is for information purposes only. While due care has been taken during the compilation of this publication to ensure that the information is accurate to the best of knowledge and belief of IBEF and IMaCS, the content is not to be construed in any manner whatsoever as a substitute for professional advice.

IBEF and IMaCS neither recommend nor endorse any specific products or services that may have been mentioned in this publication and nor do they assume any liability or responsibility for the outcome of decisions taken as a result of any reliance placed on this publication.

IBEF or IMaCS shall in no way, be liable for any direct or indirect damages that may arise due to any act or omission on the part of the user due to any reliance placed or guidance taken from any portion of this publication.

ICRA Management Consulting Services Limited